The largest provider of business insurance in Sioux Falls has a new owner with ties to one of the world’s biggest insurance brokerages.

Howalt-McDowell Insurance Inc. was acquired this month by New York-based Marsh & McLennan Agency LLC, a subsidiary of Marsh Inc.

“We weren’t for sale. I wasn’t in the marketplace,” said Jeff Scherschligt, Howalt-McDowell’s president. “They came with this unique concept.”

Marsh & McLennan was launched in 2009 as a way to help its parent company gain share in the estimated $30 billion U.S. middle market space. It has acquired 23 agencies and has $395 million in annual revenue.

Scherschligt was attracted by the company’s decentralized, entrepreneurial operating model, he said.

“My fear of selling to an outside firm would have been they’d get rid of people, they’d consolidate into a home office, and we wouldn’t be the Howalt-McDowell we were,” he said. “I don’t want to go into an organization that’s going to cut people and change the way we do things.”

The company’s name, 89 employees, location and leadership will remain the same for the foreseeable future, Scherschligt said. He plans to lead Howalt-McDowell for four years and then mentor a successor while continuing to work with clients.

The company also will continue to donate 5 percent of its pretax profits to nonprofit organizations.

The acquisition will provide more resources to help serve clients’ increasingly complex needs, Scherschligt said.

“I’m very practical,” he said. “We’re relationship people, but that only goes so far if it can’t get the job done. In business, you have to do what you have to do, so we fought hard to meet their (clients’) needs. But as their needs evolve, we believe we’ve partnered with the organization that can best meet their needs long term but do so within our local framework, which means maintain jobs locally and grow locally.”

Marsh & McLennan approached Howalt-McDowell about a potential acquisition based on the firm’s reputation in the industry, said Dave Eslick, chairman and CEO.

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“Howalt-McDowell is a very respected name in the industry. Jeff is very well-known in the industry,” Eslick said. “We only go into business with firms that have historically performed very well and are very well-respected. We want to continue to see it do well.”

Firms retain a lot of autonomy, Eslick said.

“What we do is bring other best practices and other things we see from other agencies that are going very well to make people aware of that and see if it’s something they feel would be additive to their organization and serving the client,” he said. “It’s very new and really different because most consolidations are done for an economic outcome. People make an investment, build it up and flip it and sell it. We’re looking for a strategic outcome versus an economic outcome.”

Long-time client Raven Industries Inc. believes the new partnership will strengthen Howalt-McDowell’s ability to serve customers, said Dan Rykhus, president and CEO.

“We have a great relationship with Howalt-McDowell and look forward to the opportunities that may develop from their expanded network,” he said.

Howalt-McDowell was founded in Sioux Falls in 1946 as part of a loan and real estate business owned by William Howalt and Pierce McDowell. Scherschligt’s father, Lester, joined in 1957, and the insurance business became a separate corporation six years later. As a middle school student, Scherschligt cleaned the company offices. By high school, he moved up to secretarial work, and at 29, he became president.

He was the majority owner with eight partners. The firm’s headquarters, Cherapa Place, is owned by a separate limited liability corporation.

Scherschligt plans to continue with development plans for an adjacent office building and doesn’t rule out getting into more development as he approaches retirement.

“I had to come to the conclusion that I’m not going to live forever,” he said. “Nobody’s figured that out, and I care about my customers and my employees and the community. And if I put it on the right footing … I can guarantee this beyond me. It’s hard. It’s emotional, but everything must change. It was time.”